Is Uber ride-sharing app a price-fixing scheme? Federal judge OKs conspiracy suit against CEO
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A federal judge gave a green light on Thursday to a lawsuit alleging that the head of Uber Technologies Inc. is involved in a price-fixing conspiracy with drivers who use the company’s ride-sharing smartphone application to find paying passengers.
Co-founder and chief executive officer Travis Kalanick had sought to dismiss the Manhattan case, which seeks class action status. He argued that it wasn’t physically possible for Uber to conspire with hundreds of thousands of independent drivers to increase prices paid by passengers.
U.S. District Judge Jed Rakoff disagreed. He said plaintiff Spencer Meyer, a customer in Connecticut, had plausibly alleged that a price-setting algorithm included in the app violates antitrust law because it coordinates pricing among drivers that Uber claims are independent contractors, according to Bloomberg, Reuters and the Wall Street Journal (sub. req.). The app provides for varied pricing depending on variables such as weather conditions and a larger number of customers seeking rides on certain holidays.
“The capacity to orchestrate such an agreement is the ‘genius’ of Mr. Kalanick and his company, which, through the magic of smartphone technology, can invite hundreds of thousands of drivers in far-flung locations to agree to Uber’s terms,” wrote Rakoff.
The company, which is not a defendant in the suit, said in an emailed statement that the case lacks merit. “These claims are unwarranted and have no basis in fact,” the email says. “In just five years since its founding, Uber has increased competition, lowered prices, and improved service.”
